How to speak crypto: 15 cryptocurrency terms to know
Whether you are new to the world of cryptocurrency or are a seasoned miner with years of experience under your belt, you are likely to run into some new and unknown industry terminology from time to time. In a space barely more than a decade old with new innovations taking shape every day, there is never a shortage of mysterious jargon and lingo for investors to wrap their heads around.
We have previously published this post outlining some of the more commonly known terms in crypto. This time, we would like to delve into some of the lesser–known terms that newcomers to the industry (and even some veterans) may be less familiar with.
Here are 15 cryptocurrency terms to add to your crypto dictionary to help navigate the space more knowledgeably.
FOMO stands for “fear of missing out” and is not a term exclusive to the crypto space. In everyday life, you have likely heard it refer to the fear of missing out on social events, trends, and gatherings. In crypto, FOMO refers to the act of panic-buying a coin as its price starts going up because you are afraid of missing out on its potential growth. FOMO can be a dangerous reactionary phenomenon, resulting in uninformed purchases based solely on recent growth and hype rather than strategic planning.
Buy the dip
Buying the dip refers to buying coins during periods of price decline. Crypto is and always has been a highly volatile space, with prices going up and down fairly dramatically on a daily and even hourly basis. Because of this, buying the dip is typically viewed as buying coins at a discount, because in most cases, it is expected for the price to eventually increase once again.
Market cap is short for “market capitalization” and refers to a cryptocurrency’s total valuation as determined by the value of a single coin multiplied by the total supply of that coin in circulation. At the time of writing, the top three forms of crypto by market cap are Bitcoin ($617B), Ethereum ($243B), and Tether ($62B).
A fork is a slight variation of a blockchain developed to improve on certain perceived shortcomings of the original network. Some of the most popular forks on the market today include Bitcoin Cash, Bitcoin Gold, and Ethereum Classic.
REKT literally translates to “wrecked” and refers to losing badly on a trade by either holding onto a coin for too long and seeing its price fall or by selling a coin too early only to watch its price grow significantly shortly thereafter.
A node is a basic unit of blockchain infrastructure that stores the blockchain’s code. In a blockchain, each node has a full historical record of all data on the blockchain. If a node has an error in its data, it can use the other nodes as a reference to correct itself. This system helps make the history of transactions in each block irreversible and (theoretically) immutable.
DeFi is short for “decentralized finance” and refers to a variety of blockchain-based applications that aim to disrupt the world of traditional finance. At its core, DeFi looks to move away from the third-party centralization of finance to give users more control and visibility over their money. CeDeFi is short for “centralized decentralized finance” and refers to a combination of traditional centralized financial services and decentralized apps.
Gas price refers to the fee paid when making a transaction on the Ethereum network specifically. During an ether transaction, you essentially pay a miner to go out and receive the crypto for you, with the option to pay higher fees for faster transactions or lower fees for slower transactions.
NFT stands for “non-fungible token.” NFTs are tradeable digital assets valued for their rarity, indivisibility, and uniqueness. Popular types of NFTs include digital art, video game tokens, and professional sports highlights. Unlike exchange-traded fungible tokens, NFTs are transferable. They are also authentic and preserve ownership rights, meaning no one can alter the data of an NFT once committed.
Proof of work
Proof of work is a type of protocol used to reward miners for solving a block. Designed to help secure the network from attacks, proof of work requires miners to show their work by tying a variable to the process of hashing a transaction. In the end, a hashed block proves to the network that work was completed and thereby rewards the miner.
Proof of stake
Proof of stake is a lesser–known protocol for rewarding miners, allowing users to validate or mine crypto based on the number of coins they stake. Also intended to help secure the network, the overarching idea of proof of stake protocols is that the miner will be less likely to attack the network if they have a vested stake in the game.
Staking is a way of earning a percentage-rate reward for certain crypto holdings over time. When your crypto is staked, the blockchain puts it to work in the proof of stake consensus mechanism to help ensure all transactions are verified and secure. Many view staking as a means of making their assets work for them, rather than simply sitting idly in their crypto wallet.
Smart contracts are a core element of DeFi and NFTs and are the primary basis of many different DeFi apps. They enable transactions to automatically execute once certain conditions are met and can be used by lending platforms to replace intermediaries while still managing the lending process.
A 51% attack takes place when more than half of the computing power or hash rate on a network is run by a single person or group of people. If in effect, a 51% attack would allow the controlling attackers to prevent the confirmation of new transactions and would even let them reverse already completed transactions to then double-spend coins. The potential for a 51% attack represents one of the greatest threats to crypto’s decentralization.
A halving is an event where a blockchain’s block reward is cut in half, such as has happened on numerous occasions to bitcoin as well as to Zcash at the end of 2020. Halvings are designed to prolong the period of time it takes for the entire supply of a coin (like bitcoin) to be mined into circulation.
Flippening refers to an event Ethereum users hope will happen wherein the total market cap of ETH surpasses that of bitcoin. At the time of writing, there is still a ways to go, with ether trailing bitcoin by more than $350 billion.
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